Interview with TVNZ Wellington, Guyon Espiner

Guyon Espiner: Well Minister thank you very much for joining us on the programme, we really appreciate your time.

Stephen Smith: It's my pleasure.

Guyon Espiner: The stated aim of both New Zealand and Australian leaders is to improve the quality of the relationship. Let's start in an area which affects roughly two million New Zealand and Australian travellers every year, that is a common border, a border without Immigration and Customs processing. When is that going to happen?

Stephen Smith: Well hopefully we'll see substantial improvements to these arrangements in the near future. It's one of the things that our two Prime Ministers have spoken about. It's one of the things that they regard as being included in their action agenda, and it's one of the things that I spoke about in the course of my time here with Foreign Minister McCully.

Guyon Espiner: What does near future mean Minister?

Stephen Smith: We're hoping to see progress in the course of this year, but I think if you look at the strength of our bilateral relationship and the comprehensive nature of it, those issues are logical extensions of what we've seen for more than 25 years. We are the beneficiaries of the most successful Free Trade Agreement for....

Guyon Espiner: Sure we won't get on to that but this has been under discussion since 1992. Why does it take us so long to have something so simple and so tangible that affects people, that makes business and travel so much easier.

Stephen Smith: I'm pleased that you're very passionate about it and we should let passion see the conversation through. What we're seeing now is the extension of the benefits of our Closer Economic Relations. It's been the most successful Free Trade Agreement for 25 years and we're building on that, and that's a very good thing to do, and your passion is shared by the Australian and New Zealand government.

Guyon Espiner: What are the barriers though Minister?

Stephen Smith: Well the barriers are we need to make sure that these arrangements are dealt with properly and sensibly, and they'll come. We have the Closer Economic Relations, we're looking for single regulatory arrangements, and what is the objective of this? Just put all of the technical issues to one side, what's our objective here? Our objective here is to grow two economies, our objective here is to make investments easier...

Guyon Espiner: They are high level aims, but the man in the street on both sides of the Tasman wants to see some practical gains from that, so I'm asking what ...

Stephen Smith: Can I say the most important practical gain that the man in the street or the woman in the street either in New Zealand or Australia can benefit from, is economic growth, and what we're seeking to do is to build on our economic growth, to build on our productivity, to build on the attractiveness for trade and commerce to flow between our two countries, for people to people movements to flow between our two countries, and for that investment environment to be enhanced. The most practical and effective thing that both governments can do for their peoples, particularly at a time of economic difficulty, is to grow the economy, and that's what we're doing; to grow investment, to grow ease of regulation, and people to people movement is part of that, and these things will come and we expect them to come quite quickly.

Guyon Espiner: You expect that to be in place this year?

Stephen Smith: Well we certainly think we can get agreement about the details of them in the course of this year. I think what is actually under appreciated is the comprehensive nature of the relationship between Australia and ...

Guyon Espiner: Now I want to talk about that because we have...

Stephen Smith: It would be nice if we were talking about that. If you let me finish; what is under appreciated is the comprehensive nature of the relationship which goes to all of these things. And it's under appreciated in a whole range of areas, and those people to people movements I think is one of the areas where it is under appreciated. At any given time, for example, in Australia there'll be up to half a million New Zealanders. People from Australia come to New Zealand on a daily basis. The people to people exchanges are very good and we think we can make them better in a manner which will improve the economic and commercial productive relationships between our two countries.

Guyon Espiner: Let's talk about some of this greater integration that both sides apparently want and are aiming for. On the 25th anniversary of the Closer Economic Relations Agreement in August last year, John Allen who was formerly the Chair of the Australia New Zealand Leadership Forum and the next head of our Ministry of Foreign Affairs, said we need to move to the medium size stuff, and I quote him, he said "like a common currency, a common passport and common borders". Are those things on the table, are they part of the discussion?

Stephen Smith: I think if you deal with those things in a sense in the abstract, you do run the risk of losing track of the improved practical things that we're trying to do. Now in the course of my time here I've met with Mr Allen, he will chair, co-chair the next leadership forum that we have.

Guyon Espiner: And he wants a common currency, is that something you're willing to discuss?

Stephen Smith: It's not something that I have on my agenda in the short term. Certainly the practical advantages which come from a phrase such as 'common border' - ease of people to people movement, ease of regulatory arrangements - are one of the things that we're working very carefully and very assiduously on. And we are very confident that there'll be agreement about those matters in the course of this year, and that will enhance what we're currently doing.
The other things that you've referred to, that John has referred to in the past, and that other people have referred to in the past, I think are much longer term issues. What we want to do is to build on the very good relationship that we have, to make the investment, to make the people to people movements, to make the exchanges easier. But at the same time respecting each nation's state sovereignty, and whether it's a quarantine issue, whether it's an immigration or a border issue, these things of course have to be thought through carefully and respectfully.

Guyon Espiner: Sure, we also have closer defence relations, that's a stated aim of both governments too, and in your White Paper on Defence that was recently published in your country, you talked about that greater integration saying that it could possibly be as ambitious as an ANZAC taskforce capable of deploying seamlessly at short notice into our immediate region. Do you share that ambition?

Stephen Smith: We certainly share this ambition. There's a great historic connection between Australia and New Zealand in military terms through our ANZACs. We have the closer defence relations and we work very closely, but we would frankly like to see some modern day expression of the ANZAC iconic symbol. It is already the case that we work very closely in our region: RAMSI the Mission to Solomon Islands is one example, East Timor is another, we both have contributions to Afghanistan...

Guyon Espiner: Do you want to take that to a new level?

Stephen Smith: Yes we do, albeit in different areas.

Guyon Espiner: You would go for an ANZAC taskforce?

Stephen Smith: I think the first thing we have to do, we've done our White Paper, part of that White Paper is, we want to continue our very close relationship with New Zealand, we'd like to make it more seamless, and that's for a very good reason.

If for example there's a difficulty in our backyard in the Pacific in particular, even in Asia, and there is a requirement for assistance, and that military assistance more often than not these days comes not just in the context of peace and security but also as disaster relief in the aftermath of a terrible human disaster, whether it's an earthquake or whether it's a cyclone.

Working closely and seamlessly in that context is also a sensible thing to look to, but we have to wait and we are very very happy to wait patiently for the New Zealand Government's processes to continue. They're working on their own White Paper just as we consulted New Zealand and let New Zealand know what we have in mind in the course of our White Paper presentation. That will be reciprocated. Murray McCully and I spoke about this yesterday.

So we'll wait until New Zealand publishes its White Paper and then see how we can advance these thoughts. But you shouldn't be under any illusion that the New Zealand Government and the Australian Government are both absolutely committed to the ongoing close Defence relationship that works well for both our countries, but more importantly it works well for our region and for the contribution we can make for the international community.

Guyon Espiner: Let's talk about one of the big issues in the region, that's Fiji. The regime is really being treated as a pariah, it's been suspended from the Pacific Island Forum, both Australia and New Zealand have imposed fairly tough sanctions on travel, is that approach working?

Stephen Smith: Well they should be treated like pariahs', this is effectively a military dictatorship. This is a regime that has taken Fiji away from democracy.

Guyon Espiner: Is it working Minister, is our approach working?

Stephen Smith: And as a consequence of taking Fiji away from democracy we're seeing deleterious economic and social circumstances in Fiji. The sanctions that Australia has are tough travel sanctions on members of the regime. We don't want to do anything which adversely impacts on the Fijian population or the Fijian community, which is why for example we continue to provide urgency or humanitarian assistance, and we don't have trade barriers.

Guyon Espiner: You spoke though yesterday and said several times that their economy was in a lot of trouble. Now from reading I've done 25% of people in Fiji are living below the poverty line right now, I mean what is the strategy here, are we trying to bring Fiji to its knees economically?

Stephen Smith: No we're trying to get Fiji off its knees, on to its feet, in a democratic state. But also in a state which enhances and improves its very deleterious economic and social circumstances. We have never imposed or contemplated sanctions which would have an adverse impact on the Fijian economy, on the contrary.

Fiji should be a premier nation and a premier economy in the region. Now it's going to take in my view lots of effort, a long hard struggle, to get the regime back into a dialogue which will see democracy emerge in Fiji.

In the shorter term in Fiji, because of the economic management or mismanagement by the regime, compounded by the global economic recession, I fear we will see very severe adverse economic circumstances in Fiji in the near future. And the international community through the international financial institutions will need to respond to that.

Guyon Espiner: So is the economy close to tipping over, is that what you're saying?

Stephen Smith: Well I think it's in a very precarious situation, I think it's in a very precarious situation.

Guyon Espiner: And they will need to call on the likes of the IMF etc is that what you're saying?

Stephen Smith: My understanding is that some of those discussions have already occurred, conversations between Fiji and the international financial institutions, as they should. One of the reasons that we have international financial institutions is to try and prevent national economies from falling over, and that is very important particularly in the face of the global financial crisis.

Guyon Espiner: Would New Zealand and Australia have a role there economically, because it must worry you, an already volatile country, close to the edge economically, I mean what would the ramifications be and would New Zealand and Australia have to come in there?

Stephen Smith: The ramifications are potentially very adverse for the people of Fiji. But in the first instance the primary responsibility in these circumstances rests with firstly the Fijian administration but secondly the international financial institutions. But overriding or in parallel with these matters of course is that the international community continues to make the point to the administration, to the regime, that it has to go back to a dialogue, has to go back to a path which sees democracy restored. These things go hand in hand, there's a direct link between the decline in Fiji's economic circumstances in advance of the global downturn and it's walking away from democracy by the regime.

Guyon Espiner: In the last few minutes that we have I want to look more broadly at Australia's place in the world, I mean for decades now your most important strategic relationship has been with the United States. Your White Paper seems to envisage a waning a little bit of America's power over time and the rise of China, and in fact your White Paper says the pace, scope and structure of China's military modernisation has the potential to give its neighbours cause for concern, it seems like Australia is threatened by China, is that the case?

Stephen Smith: I think there are two issues. We don't just have a relationship with the United States, we have an Alliance with the United States. And that Alliance has served both countries well for over 50 years, and that alliance remains the bedrock of Australia's strategic security and defence arrangements...

Guyon Espiner: But you're worried about the rise of China, the military build up of China.

Stephen Smith: We have said privately to China, and publicly, that the international community needs to have confidence in China's emergence.

Guyon Espiner: Do you not have that at the moment?

Stephen Smith: China's military modernisation needs to be open and transparent.

Guyon Espiner: Is it?

Stephen Smith: And the strategic underpinnings of that need to be openly discussed by China, and we've made the point...

Guyon Espiner: That they need to do more.

Stephen Smith: We've made the point to China they need to be more transparent. We've made that point, but what we're seeing in the course of this century, we're seeing strategic, economic, political influence move to our part of the world, move to the Asia Pacific. That is in part the rise of China. It's also the rise of India. It's also the rise of the ASEAN countries and economies combined. So the world has to come to terms with the emergence of China, the emergence of India. So how does our regional community, how does the international community deal with that? China says it wants to emerge into a harmonious environment, we say we want to see China as a responsible international stakeholder, and we're confident that these things can occur.

Guyon Espiner: It's interesting though isn't it Minister because you want China to do more to explain their military build up, you're spending a hundred billion Australian dollars over the next 20 years, the largest naval build up since the end of World War II, isn't that completely out of proportion to the two facts?

Stephen Smith: And what's your complaint that we've signalled this 20 or 30 years in advance?

Guyon Espiner: I'm asking you to explain what's the threat?

Stephen Smith: We are very transparent. Firstly the White Paper which we do on a regular basis, and which we've committed ourselves now to doing effectively every five years, we publish openly and transparently. What is the White Paper?

The White Paper reflects the fact that the Australian Government has no greater priority, nor obligation, nor responsibility, than to ensure we do everything we can to protect our national security interests. We're very open about that, we're also very robust about that, and as I say the world needs to come to grips with the fact that political, strategic, evening indeed military influence and economic influence is moving to our part of the world.

We need to respond to that, the international community needs to respond to that. And that's why not only is Australia looking to the future in these respects, so is New Zealand with its own White Paper looking at the strategic implications and the force if you like, the Army, Air Force and Navy force implications which flow from those strategic assessments.

Guyon Espiner: Alright that's pretty much all we've got time for, but thank you very much Minister for joining us on the programme.